By Mark Scheer
The city’s HOPE VI housing development project is headed for an important vote.
Members of the Niagara County Industrial Development Agency’s board of directors will be asked next week to approve an increase in tax-exempt bond financing for the initial phase of the project.
The March 10 meeting is vitally important to Sam Savarino, president and chief executive officer of Savarino Construction, the firm in charge of the HOPE VI development. Without approval, he says construction will cease, he’ll be forced to send his workers home and the half-built first phase of the project will shut down prematurely.
He sums up the worst case scenario in five words: “A lot of money wasted.”
“They have to make the decision they feel is best for their reasons,” Savarino said of the IDA board. “I find it difficult to have an argument against it that is supportable that would cause it to be defeated. On that basis, we’re hopeful.”
Hope hasn’t exactly been in abundant supply lately among some local political leaders who have been asked to support the HOPE VI project. Members of the IDA board grilled officials involved in the project last month, expressing concern about the amount of taxpayer investment and the level of environmental testing performed prior the start of construction. Several county lawmakers aired similar complaints last month.
Supporters insist better days are ahead for HOPE VI. They say environmental and financial concerns have been addressed, construction has resumed and by the end of the year the first batch of affordable housing units promised to the community will be ready for occupancy.
Norstar needs the IDA to issue $18 million in tax-exempt housing revenue bonds. The amount represents an increase of $2 million from a request made in 2007 when $16 million in bond financing was proposed. Norstar was forced to return to the IDA for the $2 million increase after its original bond buyer, MMA Financial, pulled out of the deal in the wake of the 2008 banking crisis. The project’s new investment partner is the Richman Group out of Connecticut.
Bonds issued by the IDA are purchased by investors to generate cash for construction. The IDA has the legal authority to issue housing revenue bonds. The county Legislature authorized tax-exempt status for those bonds last month. The second round of bond financing comes at no additional cost to the IDA or Niagara County. The IDA is actually set to earn a $180,000 fee for overseeing the process.
IDA Board Chairman Henry Sloma, who has previously characterized the developer’s handling of the bond re-issue as “very sloppy,” said Tuesday he will vote in favor of giving HOPE VI the help it needs. He said he did not want the financing vote to serve as a referendum on the project as a whole, adding that he believes the last thing Niagara Falls needs is another incomplete project.
“We’re hopeful that the project gets back on track and is completed,” Sloma said. “The reality is everyone wants the same thing now. They want this project completed. They want this housing to be available to the community. I just think we need to go forward and get it done.”
Linda Goodman, executive director for project developer, Norstar Development, USA, admits the project has not progressed as smoothly as her company would have liked but said finishing the job makes sense for the city which is getting $20 million in federal funds to support the construction of new housing in the North End.
“These are public funds that would have gone to another community,” she said. “We have them. Let’s finish our project.”
The project has undergone some changes since the Niagara Falls Housing Authority applied for HOPE VI funding through the U.S. Department of Housing and Urban Development. The first phase, which is roughly 50 percent complete, involves 115 units. The cost of the first phase has increased, from the initial price tag of $31 million to $35 million.
Phase II calls for the construction of another 100 units to replace those currently found at Center Court. The second phase has a price tag of about $30 million. A third phase, which involved construction of new homes for income-qualified individuals in the LaSalle area, is currently on hold due to financial concerns in the market, Goodman said.
The first phase of construction temporarily ceased in August when officials from the county Health Department detected incinerator ash on the construction site near Center Court. Work resumed in July following an extensive cleanup effort. Several homes that were under construction when the project was put on hold were later demolished due to mold problems.
Both Goodman and Savarino characterized the soil and mold problems as unfortunate and costly. They rejected critics’ claims that they failed to perform an adequate level of soil testing prior to the start of construction.
“The amount of testing was due and proper and was required by all the agencies,” Savarino said. “Nobody wanted this. Everybody would have wanted to identify the problem in the beginning. Nobody asked for this or took advantage of this. This cost everybody a bunch of money dealing with this. Everybody was motivated to make sure there were no problems.”
Overall project cost has been another major concern raised by critics and some county lawmakers who have suggested that units are being built for upwards of $200,000 apiece. Goodman and Savarino said those individuals are overlooking other aspects of the project tied to overall construction, including electrical line work, water and sewer line improvements and other infrastructure upgrades. Norstar pegs the actual cost per unit in phase I at $143,478. Goodman said auditors from the state and HUD approve and audit all phases of development to ensure that all public dollars are being spent wisely and appropriately.
“We’re not fooling around here,” she said. “We have a lot of people looking over our shoulders. We are following the rules.”
